Today we are going to address the differences in process of buying older construction, whether it be a fee simple single family home, condominium, or a co-op. And we will also discuss the differences between older construction and new construction, whether it be a rowhome that now has an added floor and a roof deck, with a possible basement rental unit, or even just one of the many new condominium buildings that you see as you drive through neighborhoods like Petworth, Columbia Heights, Logan Circle, Capitol Hill or Bloomingdale.
SOMETHING OLD: When buying an older home, chances are you will be using the GCAAR (Greater Capital Area Association of Realtors) or an NVAR (Northern Virginia Association of Realtors) contract. These are standard contracts that are used time and again in regional real estate transactions. As a buyer, you will choose whether to include a financing contingency or a home inspection contingency. You will then proceed with the terms of the contract if you ratify, and then will sign papers at the settlement table with a local title company and receive the keys to your condominium or home. One advantage of buying older construction that new construction doesn’t come with is that the building has been tested and lived in.
SOMETHING NEW: However, if you are buying new construction, many times the builder has a contract that they want you to use, and often prefer you to use their preferred title company or sometimes offer incentives to use their preferred lender, such as closing cost assistance or a credit. Many times, the builder contract still has language in it to protect a buyer from losing their Earnest Money Deposit, and many times the builder contract still allows the buyer to have a home inspection and write up a punch list of items for the seller to fix before the buyer takes possession of the property.
SOMETHING BORROWED: Most lenders can work with their clients on helping them to buy old or new construction. If the buyer is using a VA loan, they might have to get a new construction building approved by the VA before issuing a loan in the building. Most lenders will want to see that an older building has been taking care of its maintenance responsibilities, as well as replenishing reserves for future projects, such as installing a new elevator, or repairing the roof. As we saw in the D.C. area this past weekend, a windstorm can come out of nowhere and suddenly money needs to be available to fix items that were damaged in a storm. In new construction, the condo fees for vacant and unsold units are usually estimated and covered by the builder until enough of the building is sold and occupied that the buyers can take over paying for the community amenities, maintenance, and building up the reserves.
SOMETHING YOU: What is almost always possible whether you are buying new construction or older construction is the ability to make alterations to the unit and tailor the layout, décor and features to your needs. Many older condos get bought, the kitchen wall gets blown out and then the new owner now has an open concept kitchen, which is great for entertaining guests and keeping the conversation going. New condo buildings sometimes have various levels of finishes that a buyer can discuss with a representative from the developer and decide what color countertop or backsplash they will be installing in the kitchen, and which package of finishes they want in the master bathroom.
Buying a home, whether old or new, is a great way to make sure you are living in something that is tailored just for you.